POSTSCRIPT / November 26, 2002 / Tuesday


Philippine STAR Columnist

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2004 elections behind plot to grab Meralco?

FIRE PEREZ!: With Justice Secretary Hernando Perez sinking fast with a heavy “Million-dollar Man” tag around his neck, if I were President Gloria Macapagal Arroyo I won’t let the day pass without firing him.

The noisier and bloodier the execution of the controversial justice secretary, the better for GMA. Nothing less than shock treatment can bring this patient of a nation in extremis back to its senses.

Let’s face it — Perez will no longer be credible and effective. His guilt or innocence of charges that he has taken $2 million from a businessman in trouble with the justice system has become irrelevant.

Like Caesar’s wife, a Cabinet member should not only be clean, but also smell and look clean. At this point, there is no sense keeping and allowing him to bring down the entire administration with him.

The alternative is for Perez himself to resign without waiting for the President to take extreme measures, or to announce a Cabinet shuffle on Nov. 30, to save her administration.

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FPJ IS TOUGHER FOE: President Arroyo better move fast — preferably before the year ends. To try for an emergency resuscitation of the patient in 2003, a politically charged year, might be too late.

Firing Perez outright won’t be fair to him? Yes it is not fair, but when has politics been fair anyway?

The surveys we have seen show a continuing slide for GMA even among the middle class who had thought that this doctor of economics would be a vast improvement over the movie star before her in the Palace.

It would be double disaster for GMA, weighed down by other Perezes, to be trounced in 2004 by another action star in the person of Fernando Poe Jr.

Without exception, everybody we have asked both in the administration and the opposition camps says that FPJ will be the more formidable rival in 2004, compared to Sen. Panfilo Lacson. (The bland Sen. Edgardo Angara is out of contention.)

Even former President Erap Estrada, who avoids showing any preference this early, concedes that “Da King” of local filmdom will be the stronger opposition candidate for president.

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GOV’T TAKEOVER PLOT: We sense that none of the parties in the fight for control of the Manila Electric Co. (Meralco) is telling us the whole truth. Hence, we are forced to fill the blanks ourselves to be able to at least see the outlines of the incomplete picture.

We see big power politics coloring every frame in the unfolding saga, as it did when the dictator Ferdinand Marcos moved in the 1970s to wrest ownership of the crown jewels of the Lopez empire.

Events during the past several days after our publisher Max Soliven (By the Way) scored a scoop on a government plot to take over Meralco have confirmed the Arroyo administration’s designs.

Through Finance Secretary Jose Isidro Camacho, the administration has given the Lopez clan a draft memorandum of agreement whose gist is for government taking all key management positions from nominees of the Lopezes.

As of yesterday, the latest newsbit has the Lopezes serving notice that they will resist the hostile takeover.

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TARGET: 12-M VOTERS: But why would the government want to grab Meralco from the Lopez clan?

The more obvious attraction of Meralco is wealth. But the ulterior motive of capturing Meralco, we think, is still Power Politics, especially as it will help shape the outcome of the 2004 presidential elections.

Let’s start with 3 million, the lowest estimate of the number of households drawing electricity from Meralco and who are directly affected by any development in the giant power distribution firm.

Multiply 3 million by 4, the average number of voters per family or household, and you get 12 million — a number that no presidential candidate facing a formidable opponent like FPJ can ignore.

Would not it be nice if President Arroyo gets the inside track to these 12 million customers (voters) by controlling Meralco and using it to court them with virtually subsidized low electricity rates until the May 2004 elections?

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SOFTENED FOR THE KILL: The bombardment of Meralco, to soften it for the kill, is reminiscent of a similar scenario some 30 years ago when the dictator Marcos laid the economic and legal basis for grabbing the Meralco.

The then Public Service Commission granted Meralco in May 1972 a rate increase of 36.6 centavos/kilowatt-hour.

But days after martial rule was imposed on Sept. 21, 1972, Marcos replaced the PSC with a Board of Power. There was actually no need for the replacement since the two bodies practically had the same functions, but that was the way Marcos laid the basis for his next moves.

The new board then went to work. It reduced the approved rate increase by a drastic 20.9 percent. With Meralco being the financial mainstay of the Lopez empire even at that time, the resulting financial dislocation of the cash cow spelled disaster.

Benpres, the Lopez holding company, defaulted on many loans. In November that same year, Geny Lopez, the eldest son of the Lopez patriarch Don Eugenio, ailing in San Francisco, was thrown into jail for an alleged plot to assassinate the President.

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CASE OF DÉJÀ VU: It is uncanny that this time around, Meralco was denied any rate increase for eight years on the simple expediency of the Energy Regulatory Board (now a commission) sitting on its application for adjustment and imposing conditions not inflicted on other utility firms.

Comparatively, from 1994 to the present, the price of fuel oil rose by 277 percent, while liquefied petroleum gas (LPG) and diesel went up by 100 percent. Rates for residential telephone lines (PLDT) went up by 152 percent; and transportation fare by 126 percent. Minimum wage went up during the eight years by 142 percent.

(After imposing martial rule, Marcos cut down Meralco and confined it to power distribution with the National Power Corp. given the generation business.)

There were increases in electricity bills, but these went to covering increases in generation costs, and not paying for distribution costs. Napocor’s generation costs kept going up by 9 percent every year, but Meralco’s distribution rates remained constant.

As a result of the squeeze play, Meralco has not been able to achieve its profitability cap of 12-percent Return on Rate Base (RORB) fixed by law and required by its creditors.

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UNEVEN PLAYING FIELD: Already hurting (it expects a loss this year), Meralco was slapped by the ERB with a decision that it should not include its income tax payments to its operating expense in computing its RORB.

The firm found this unusual and discriminatory since the same ERB (now ERC) has allowed other utility firms to include income tax in their operating expenses for computing profits.

This is no casual matter because this point (exclusion of income tax) was one of two major issues that the Supreme Court upheld in its Nov. 15 decision ordering a refund of excess payments made by Meralco customers since 1994.

Most people, by the way, have missed the detail that the excess payments were actually authorized by the ERB subject to review. The rate increase, which was later reduced, was not unilaterally imposed by Meralco.

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(First published in the Philippine STAR of November 26, 2002)

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